The large golden domes of the Maharishi University are an incongruous landmark for a sleepy Midwestern town close to the Mississippi river.

Even more unlikely are the scenes that take place beneath them as students from across the globe gather twice a day to meditate and send out cosmic vibes of spiritual energy that they believe can heal a stress-stricken world.

But now a murder and allegations of a cover-up have shattered the tranquillity of the college and of the town of Fairfield, Iowa.

The killing of one student by another has threatened the future of not only what Maharishi disciples call 'a safe, harmonious campus', but also undermines the credibility of the one-time guru of the Beatles and spiritual leader to Hollywood celebrities including film-maker David Lynch and actress Heather Graham.

Maharishi Mahesh Yogi, the bearded purveyor of world peace, heads a movement of tens of thousands of people who believe their brew of transcendental meditation and yogic flying - a kind of bouncing which devotees claim is akin to levitation - sends out powerful vibes of harmony that can end conflict across the planet.

In the east-facing buildings of the 272-acre Maharishi University, some 800 students mix a traditional undergraduate education with a heavy dose of meditation and yogic flying.

But in the early evening of Monday 1 March an incident occurred which critics allege makes nonsense of the notion that meditation can bring world peace.

At 7pm Shuvender Sem, a 24-year-old from Pennsylvania, sat down in the university dining hall with fellow students to eat his organic vegetarian dinner. Suddenly Sem stood up, took a knife from his pocket and plunged it into the heart of 19-year-old Levi Butler.

In the ensuing melee, Sem stabbed Butler at least three more times before he was restrained. The police were called and Sem, said to be extremely calm, gave himself up. Butler was taken to Jefferson County Hospital, where the first-year student from California was pronounced dead.

The death left many in the college in a state of shock - if yogic flying brings harmony how could one of their own kill in their midst? And as further details of that day emerge, more serious questions are being raised about the Maharishi's theories.

The knife Sem used belonged to the dean, Joel Wysong. Earlier that day, in a class called Teaching for Enlightenment, Sem attacked another student, John Killian, stabbing him in the face with a pen. Killian needed seven stitches. Sem was taken to the dean's apartment where he was supposed to be under supervision. But it was there that he stole the knife before going to the dining hall.

Sem has been charged with aggravated assault for the first attack and first-degree murder for the second. But because the university authorities did not report the earlier crime, this has led to the allegation that they intended to cover up the violence.

Critics of the Maharishi - including former students and staff and Fairfield residents - have been inundating the local newspaper with calls and emails. They allege that the movement strives to prevent negative publicity that might halt donations from its wealthy alumni. Some claim incidents have been hushed up in the past, although no hard evidence has emerged.

The university defended itself by saying it was not its role to bring criminal charges and that this is the first such tragedy to happen on a campus claiming to be the most crime-free in America.

Some members of Butler's family are now considering suing the university, which could have devastating repercussions for its international reputation.

Butler's uncle, Benjamin Howard, posted an email which said: 'I am terribly angry that this organisation places its public appearance above the safety of its students. The earlier link "Safe Harmonious Campus" from the [university] web page reveals one major selling point for the university. Of course an administrator wouldn't wish to call police when something violent happens on campus. It would ruin that unblemished record of 30 years with no crime. If a lawsuit is necessary to teach this campus a lesson, then so be it.'

The Maharishi himself is reported to have blamed the violence on US foreign policy. Dr Craig Pearson, executive vice-president of Maharishi University, said: 'Maharishi Mahesh Yogi has made one comment regarding this event. He said that this is an aspect of the violence we see throughout society, including the violence that our country is perpetrating in other countries.'

But the most serious criticism levelled against the movement is that transcendental meditation may exacerbate existing psychological problems in students.

Dr Kai Druhl taught physics at the university for 13 years. He has since left to teach at a college 20 miles away after becoming disenchanted with the movement.

He said: 'There were certainly initial benefits for some of the students but the promise of complete enlightenment is just not true ... it just doesn't happen and I saw how this intense meditation can damage some students, particularly if they have mental problems.'

Druhl recalled a student with schizophrenia being told to come off his medication, as meditation along with a herbal remedy would cure him. The student had a major breakdown.

Druhl described a culture where such events were treated as 'top secret'. He said: 'There was a definite understanding between staff members that you must not allow any bad news to leak out. You were required to keep up this image of a perfect campus at all costs.'

Supporters of the Maharishi claim the murder was a freak tragedy that could happen anywhere. They say the university did all it could in the circumstances and has been as open as it can. Some blame the alignment of the planets for the tragedy, while others believe the 'Maharishi Effect' was not sufficiently in place to protect Butler because of the declining number of people meditating in the domes.

Bill Goldstein, the university's lawyer, said: 'In my 22 years as legal counsel the issue of image is never considered with regard to reporting incidents on campus. The university reports incidents to the police every week for their action and has always done so. The fact is that the university is the most crime free of any in this state. No incident like this has ever occurred.'

Defending the university's failure to report the earlier stabbing, he said: 'The injury did not appear serious. The event appeared as a very short altercation in class with a rather minor wound and its implications were, very unfortunately, not apparent at the time. Nevertheless, Sem was removed from class and placed in the custody of the Dean of Men to consider what immediate disciplinary or precautionary measures should be taken prior to a customary, full-scale disciplinary review.'

As the Maharishi and his followers grapple with the ramifications, the Fairfield newspaper summed up the mood of the community: 'The university cannot afford to ignore reality. It has an obligation to step back and take a good, hard look inside - for the sake of its students, its movement, its town and itself.'